PRESENTATION

Presentation
Goals and mission
Context
Definition of sustainable development
Definition of CSR
Defintion of SRI

Presentation

ORSE – Observatoire sur la Responsabilité Sociétale des Entreprises, which means Study Center for Corporate Social Responsibility, is a French network designed to study and promote socially responsible investment (SRI), corporate social responsibility as well as all the issues related to sustainable development. ORSE is a non-profit organisation that has been set up in June 2000.

ORSE gathers together 100 actors:

Listed companies, including French major corporations such as Vivendi Universal, Renault, LVMH, Total.
Fund managers and their professional organisations such as the AFG.
Banks and insurers for instance BNP-Paribas, Société Générale and Axa.
Trade unions, such as CGT, CGT-FO, CFDT, CFE-CGC, and CFTC.
Professional organizations such as the association of human resources directors (ANDCP).
Non Governmental Organisations such as Amnesty International.

ORSE is the only French organisation bringing together so many diverse actors, all committed to SRI and corporate responsibility development. It constitutes a think-tank, bringing together actors involved in diverse fields, such as scientists, academics or experts.

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Goals and missions

ORSE aims, first and foremost, at :

Collecting, analysing and advertising information, documents and studies relevant to corporate social responsibility and to socially responsible investment in France and foreign countries.
Diffusing information to its members by all the appropriate means.

More generally, the association will carry out every task related directly or indirectly to its mission, such as :

Initiating and animating a network of actors involved in the field of corporate social responsibility.
Proposing to its members instruments (information, identification of foreign networks) to help them in their reflection and actions.
Foster the exchange of information between the members of the association about their experience.
Identify the “best practices” that exist in the countries close to France.
Bringing forward the reflection, particularly through working groups gathering corporate representatives, experts, academic members and trade unionists.
Facilitating the establishment of partnerships between concerned actors and networks in France, Europe and further.
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Context

In France, the awareness regarding the benefits the company and all its stakeholders derive from corporate social responsibility has been growing up quickly in the recent years.
Furthermore, many ethical funds have recently been created. In addition, the total amount of socially responsible investment is close to one billion of euros by the end of 2001.

Given France's political climate, economic events (downsizing announcement, stock-options, etc.) frequently give rise to heated debates and controversies, particularly about corporate responsibility worldwide. As a result, a reflection about corporate governance, social and environmental reporting, social indicators as well as the consequences of good social corporate behaviour on performance has arisen on the agenda.

When compared to other European countries (Britain, Switzerland, Sweden) or to the United States, France seems behind on the subject. Nonetheless, certain leaders (unions, NGOs, company executives as well as political figures) have evidently given the idea some thought. Several laws and regulations have been voted in 2001. It is noteworthy to state three of them:
19th of February 2001: "Employee Saving Plan" law, which asks the fund managers to "disclose the extent to which social, environmental or ethical considerations are taken into account in the choice of investment".
15th of May 2001: "New Economic Regulations" law, which asks the listed companies to advertise detailed environmental and social information within their yearly report to shareholders.
17th of July 2001: Law project about the retirement reserve funds that requires the same obligations from the fund manager than the previous law, but regarding retirement fund.

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Definition of sustainable development

“A development which enables present generations to satisfy their needs without threatening the ability of future generations to satisfy theirs.”

From the Brundtland Report to the United Nations World Commission on Environment and Development, submitted to the General Assembly in late 1987.

The concept of sustainable development, which appeared in the international scene for the first time in 1987, achieved even more widespread recognition in 1992 at the United Nations Earth Summit in Rio de Janeiro, with the publication of Agenda 21. This agreement, signed by 178 nations, sets guidelines for humanity to adopt in the 21st century in order to maintain social and economic development in a livable environment. It is the prerogative of each State and international Institution to integrate the articles of the agreement in its legislation.

Transposed to the corporate world, sustainable development is expressed in particular by the idea of the “triple bottom line”, which leads to evaluating the performance of companies according to three new sets of factors:

Environmental:
Compatibility between the activities of companies and the sustainability of ecosystems. This includes analysis of the impacts of companies and their products in terms of resource consumption, waste production, hazardous pollutions, etc.
Social:
Social consequences of the activities of companies for all the communities concerned : employees (working conditions, wages, non-discrimination, etc.), suppliers, customers (safety and psychological impact of the products of companies), local communities (harmful effects, respect for crops), and society as a whole.
Economic:
Conventional financial performance, but also the ability to contribute to the economic development of the corporate operating area and stakeholders ; respect for the laws of fair competition (absence of corruption, no abuse of monopoly power, etc.).
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Definition of Corporate Social Responsibility

Perception of corporate responsibility has of course an important influence on the analysis of the company. We have tentatively outlined seven approaches that correspond to various trends and cultural variations within the SRI realm. The approach can be recommended either by the rating organisation or the client, depending on the services offered (e.g. ad hoc information research or rating). The agency will often adopt an approach inspired by a spectrum of the approaches described below.

Ethical:
Consists in applying ethical beliefs to investment. It was the first type of SRI. In most cases, it goes hand-in-hand with the use of exclusionary filters, rejecting businesses operating in fields that are considered to be unethical, such as alcohol or pornography.
Environmental:
Selects companies solely according to their environmental performance.
Social:
Screens companies only according to their social policy or human-rights record.
Citizenship:
Based on the concept of community (minorities as well as local communities). It is particularly developed in the United States. One of the most important factors is non-discrimination on the basis of gender, race or community-building policies and initiatives.
Sustainable development:
Based on the concept of sustainable development. Thus, it gives an advantage to the companies having a good record in the three fields of responsibility: social, environmental and economic fields. Moreover, it emphasizes the long-term impacts of the activities of companies and the management system been set up to guarantee ongoing progress and sustainability of strategies.
Stakeholder:
Focuses on the dialogue of companies with all of its stakeholders and corporate taking into account of their stakeholders' aspirations. This approach is often combined with the sustainable-development approach.
Financial:
Based on the conviction that taking into account social factors for the evaluation of companies provides a more accurate picture of the real value of the company than the traditional financial analyses ; thus, the resulting are more profitable than conventional ones. The concepts of commitment and public interest are not brought up.
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Definition of socially responsible investment

“The way we invest our money creates the world in which we live”.

This observation by Amy Domini, one of the pioneers of Socially Responsible Investing (SRI), explicitly states the principle on which the movement is founded: As shareholders by definition have the power to shape the world in which we live, they also have the duty to take into account the social and environmental consequences of their decisions of investment.

According to the Social Investment Forum (SIF), SRI can concretely be defined by three processes:

“screening”, which consists in including or excluding corporations from an investment portfolio on the basis of their ability to meet social, environmental or ethical criteria. (This is the aspect our guide will focus on.)
“shareholder advocacy” entails using the right to vote of shareholders and presenting resolutions in order to influence corporate governance and to make management of the company more “responsible”.
“ethical orientation” the fact that a financial institution or mutual fund invests in initiatives or companies that, though not listed, are involved in activities considered to be eminently “responsible”, such as renewable energy, organic agriculture, or community development.